U.S. blasts Lay, Skilling

Prosecutor sums up

defense responds today

jury gets case tomorrow

May 16, 2006|By THOMAS S. MULLIGAN | THOMAS S. MULLIGAN,LOS ANGELES TIMES

HOUSTON -- As closing arguments began yesterday in the trial of former Enron Corp. chieftains Kenneth L. Lay and Jeffrey K. Skilling, a prosecutor described the defendants as arrogant, self-serving executives who acted as if they alone owned the company they had helped to build.

But, in fact, Assistant U.S. Attorney Kathryn H. Ruemmler told the jury, thousands of Enron employees and other shareholders actually owned the energy company and were entitled to honesty and fair treatment from Lay and Skilling - not the "outright lies" and accounting "trickery" the government alleges they got.

Of the ordinary shareholders, including three who testified during the 15-week trial, Ruemmler said: "It was their Enron. It wasn't Mr. Lay's Enron. It wasn't Mr. Skilling's Enron."

Lay, 64, faces six counts of conspiracy and fraud. Skilling, 52, faces 28 counts of conspiracy, fraud and insider trad- ing.

They are accused of lying to the public and conspiring with subordinates to falsely inflate profits and hide losses at Enron, which went from a Wall Street darling to the largest bankruptcy filing in U.S. history. They each could be sentenced to more than 20 years in prison if convicted of all counts.

Lay and Skilling have denied any wrongdoing. Their lawyers are scheduled to present their allotted six hours of closing arguments today.

The government will follow tomorrow with two hours of rebuttal by prosecutor Sean M. Berkowitz. The jury is expected to begin deliberations later tomorrow.

The ninth-floor courtroom in U.S. District Court was at near-capacity of about 100 spectators, including news reporters, family members and friends of the defendants, lawyers involved in Enron matters and curious onlookers.

The fourth-floor "overflow room," where the proceedings are broadcast via closed-circuit television, also was near capacity, as crowded as it has been since the trial began.

In a presentation lasting almost four hours, Ruemmler hammered the central tenets of the government's case - that Lay and Skilling knew Enron was a financial house of cards and lied to keep alive the story that the company was thriving.

She said their overriding motive was to keep Enron's stock - the source of their huge personal fortunes - riding high by making sure that the company's reported earnings kept pace with the expectations of Wall Street.

Ruemmler urged the jurors to reject defense claims that Enron went bankrupt because of short-sellers and journalists writing critically about the company.

"In this courtroom, ladies and gentlemen, the cover stories have been blown. Mr. Lay and Mr. Skilling are still clinging to the cover stories," Ruemmler said.

Early on, Ruemmler unveiled an easel with a poster headlined, "Ken Lay's Philosophy." Beneath was an excerpt from Lay's testimony under cross-examination two weeks ago: "Rules are important, but you shouldn't be a slave to the rules."

As the only two chief executives in Enron history, Lay and Skilling "had their hands firmly on the wheel," Ruemmler said. "They set the tone. They created the culture."

In mid-August 2001, when Skilling abruptly resigned for unspecified "personal reasons," Enron was beset by accounting problems, faltering new businesses and overvalued international assets - "the chickens were coming home to roost," as Ruemmler put it.

At that time, when Lay and Skilling publicly announced the latter's resignation, she said they faced the choice of whether to make a clean breast of Enron's troubles. Instead, she said, they chose to lie, portraying the company as in the best financial shape of its history.

At the same time, she noted, Lay was unloading $20 million in Enron stock back to the company between mid-August and early September, selling in such a way that he wouldn't have to disclose the sales until the next year. Skilling sold $15 million of his stock a little later, on Sept. 17.

Ruemmler also branded as "absurd" the defense's contention that the only wrongdoing at Enron was the thievery secretly committed by former Chief Financial Officer Andrew S. Fastow and associates.

She asked jurors to compare the words and the remorseful demeanors of the half-dozen witnesses who admitted to participating in the years-long fraud with those of the two defendants. Lay and Skilling, she said, clung to stories that made no sense.

Ruemmler, 35, stood about 5 feet in front of the jury box as she delivered her argument, now and then stepping to a rostrum to consult notes. Behind her, Lay looked on, frowning.

Skilling, chewing on a pen, sometimes making notes, also watched Ruemmler closely.

Ruemmler's closing argument followed U.S. District Judge Simeon T. Lake III's 90-minute reading of dense legal instructions to the south Texas federal jury of eight women and four men.

Thomas S. Mulligan writes for the Los Angeles Times.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.